Amount of Shares to Issue Assignment | Homework For You
May 29th, 2020
At time 0, a firm is valued at $1,000 and has no debt. Its equity consists of 100 common shares worth $10 each. The expected rate of return for the firm is 5% in time 1 and 6% in time 2.
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At time 1, the firm decides to issue dividends of $2 per share to existing shareholders, by issuing new shares.
How many new shares does it have to issue? What is the issuing price of the new shares?Get Finance homework help today